Drilling stocks are rising as oil leaps on hopes of an OPEC deal

Energy stocks led U.S. markets higher Wednesday as oil prices surged on hopes that a deal from OPEC may cut back production.

Oil drilling stocks, or those focused on exploration and production, were the best performers in the sector. Oklahoma City-based Devon Energy leaped more than 13.5 percent in morning trade, while Marathon Oil and Transocean climbed more than 10.5 percent, and Diamond Offshore Drilling rose 9 percent.

"At this point, if this (OPEC deal) is true, this is definitely a bullish perspective for all oil stocks, especially upstream," the exploration and production companies, said Luana Siegfried, energy equity research associate at Raymond James.

"For all E&P stocks, this is a bullish call for sure, because price is directly correlated with cash flow," Siegfried said. Raymond James expects U.S. crude to reach $60 by the end of the year, and the firm has a strong buy rating on Marathon Oil and an underperform rating on Exxon Mobil.

Oil prices were higher after a source said the Organization of the Petroleum Exporting Countries had agreed on a plan to cut output based on an outline hammered out in Algiers in September, Reuters said.

Earlier, crude prices had already climbed after Saudi Arabia's energy minister, Khalid al-Falih, said OPEC members were "getting close to a deal" on a potential production cut. Oil prices have lost more than half their value since 2014 due to oversupply.